USA Technologies Announces First Quarter, Fiscal 2014 Results
Service Revenues Up 23%; Total Revenues Up 21%
Total Connections to ePort Connect Service Up 25% (year over year) to 217,000
First quarter financial highlights, compared to the corresponding quarter in the prior year, included:
-
23% increase in license and transaction fee revenues to
$8.5 million ; -
21% increase in total revenues to
$10.1 million ; -
Adjusted EBITDA of
$1.5 million up from$0.7 million ; -
GAAP net income of
$293,654 from$39,140 ; and -
Non-GAAP net income of
$74,557 , up from a non-GAAP net loss of ($95,993 ).
License and transaction fee revenues, which represented 84% of total
revenues in the quarter, were largely driven by connections to USAT's
comprehensive and turnkey cashless payment and M2M telemetry service,
ePort Connect®. Total connections to ePort Connect reached
217,000 as of
"Our first quarter results reflect solid progress toward our fiscal 2014
objectives that include 25%-30% growth in service revenues and the
doubling of non-GAAP net income for the fiscal year," said
"Our customer base grew by 50% from the first quarter a year ago, to
5,600 customers as of
New products and services introduced in the quarter included:
- Expansion of the ePort Connect suite of services with launch of the MORE. loyalty program and toolkit. Through MORE., USAT customers can build loyalty, repeat business and a greater understanding of their consumers' purchasing preferences by offering rewards and discount offers for products purchased at their cashless-enabled locations.
- Completion of the Isis® SmartTap™ integration for USAT's ePort G8 that enables consumers nationwide to pay, present loyalty cards and redeem offers with a single tap—a technical pre-requisite to USAT's "Fifth Vend Free" promotion with Isis.
-
Introduction of an integrated, mobile payment solution, ePort GO™,
designed for the
$11 billion taxi and transportation industry, which is already adding new customers and new connections to USAT's ePort Connect service base.
"In line with our expectation, the deactivations and certain pricing incentives put some pressure on gross margins in the first quarter. At the same time, however, our growing scale also opened the door for additional cost savings from one of our major suppliers, with benefits beginning in the second quarter. All these opportunities and accomplishments, we believe, put us on course for achieving our growth targets for fiscal 2014," added Herbert.
First Quarter Results
Revenues for the first quarter of fiscal 2014 were
Equipment sales of
Gross profit was
Operating margin (both GAAP and non-GAAP) expanded to approximately 1.3% from (4.9%) and (1%) on a GAAP and non-GAAP basis, respectively, for the same period in the prior year, as additional investments in sales and marketing for fiscal 2014 were offset by stronger revenues and resulting gross profit dollar contribution.
GAAP and non-GAAP net income were both positive for the first quarter
fiscal 2014. GAAP net income was
After accrual for preferred dividends, GAAP net loss applicable to
common shares was (
Net cash generated from operations of
Outlook
"As consumer behavior, mobile payment options, loyalty programs and other factors add momentum to the rate of cashless adoption in our targeted markets, we believe USAT is well positioned to benefit," said Herbert. "We are also encouraged by new developments that, in our view, reflect a stronger mindset toward cashless adoption, such as our recently announced five-year agreement with USConnect—our largest commitment ever for our ePort and ePort Connect service.
"For fiscal 2014, our priorities include delivering 25%-30% license and transaction fee revenue growth and 20-25% total revenue growth. Achievement of our revenue expectations coupled with cost efficiencies and operating leverage, should translate to a 40%-50% increase in Adjusted EBITDA for fiscal 2014 and a 100% improvement in non-GAAP net income compared to fiscal 2013," concluded Herbert.
Webcast and Conference Call
About
Forward-looking Statements:
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to USAT or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the incurrence by us of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to obtain widespread commercial acceptance of it products; the ability of USAT to raise funds in the future through the sales of securities in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability of USAT to efficiently and securely integrate cashless payment with new machine technologies; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, USAT does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
|
|
||||||||
| Consolidated Statements of Operations | ||||||||
| (Unaudited) | ||||||||
| Three months ended | ||||||||
|
|
||||||||
| 2013 | 2012 | |||||||
| Revenues: | ||||||||
| License and transaction fees | $ | 8,507,044 | $ | 6,906,356 | ||||
| Equipment sales | 1,616,014 | 1,483,921 | ||||||
| Total revenues | 10,123,058 | 8,390,277 | ||||||
| Cost of services | 5,409,463 | 4,192,360 | ||||||
| Cost of equipment | 1,130,824 | 1,053,636 | ||||||
| Gross profit | 3,582,771 | 3,144,281 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 3,295,344 | 3,215,125 | ||||||
| Depreciation and amortization | 158,509 | 343,388 | ||||||
| Total operating expenses | 3,453,853 | 3,558,513 | ||||||
| Operating income (loss) | 128,918 | (414,232 | ) | |||||
| Other income (expense): | ||||||||
| Interest income | 13,526 | 20,166 | ||||||
| Interest expense | (60,976 | ) | (23,006 | ) | ||||
| Change in fair value of warrant liabilities | 219,097 | 463,133 | ||||||
| Total other income, net | 171,647 | 460,293 | ||||||
| Income before provision for income taxes | 300,565 | 46,061 | ||||||
| Provision for income taxes | (6,911 | ) | (6,921 | ) | ||||
| Net income | 293,654 | 39,140 | ||||||
| Cumulative preferred dividends | (332,226 | ) | (332,226 | ) | ||||
| Net loss applicable to common shares | $ | (38,572 | ) | $ | (293,086 | ) | ||
| Net loss per common share (basic and diluted) | $ | (0.00 | ) | $ | (0.01 | ) | ||
|
Weighted average number of common shares outstanding (basic and diluted) |
33,324,295 | 32,518,230 | ||||||
|
|
||||||||
| Consolidated Balance Sheets | ||||||||
|
|
|
|||||||
| 2013 | 2013 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,811,900 | $ | 5,981,000 | ||||
|
Accounts receivable, less allowance for uncollectible accounts of
|
1,923,038 | 2,620,684 | ||||||
| Finance receivables | 131,237 | 116,444 | ||||||
| Inventory | 1,766,259 | 1,823,615 | ||||||
| Prepaid expenses and other current assets | 337,481 | 184,336 | ||||||
| Total current assets | 9,969,915 | 10,726,079 | ||||||
| Finance receivables, less current portion | 432,552 | 408,674 | ||||||
| Property and equipment, net | 18,098,035 | 17,240,065 | ||||||
| Intangibles, net | 432,100 | 454,053 | ||||||
| Goodwill | 7,663,208 | 7,663,208 | ||||||
| Other assets | 82,687 | 84,117 | ||||||
| Total assets | $ | 36,678,497 | $ | 36,576,196 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,053,461 | $ | 7,301,247 | ||||
| Accrued expenses | 1,496,148 | 1,468,184 | ||||||
| Line of credit | 4,000,000 | 3,000,000.00 | ||||||
| Current obligations under long-term debt | 332,052 | 247,152 | ||||||
| Total current liabilities | 11,881,661 | 12,016,583 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current portion | 84,763 | 122,754 | ||||||
| Accrued expenses, less current portion | 356,585 | 366,785 | ||||||
| Deferred tax liabilities | 47,156 | 40,245 | ||||||
| Warrant liabilities, non-current | 431,541 | 650,638 | ||||||
| Total long-term liabilities | 920,045 | 1,180,422 | ||||||
| Total liabilities | 12,801,706 | 13,197,005 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Preferred stock, no par value: | ||||||||
| Authorized shares- 1,800,000 Series A convertible preferred- Authorized shares- 900,000 | ||||||||
|
Issued and outstanding shares- 442,968 (liquidation preference of
|
3,138,056 | 3,138,056 | ||||||
|
Common stock, no par value: Authorized shares- 640,000,000 Issued and outstanding shares- 33,457,677 and 33,284,232, respectively |
221,587,319 | 221,383,373 | ||||||
| Accumulated deficit | (200,848,584 | ) | (201,142,238 | ) | ||||
| Total shareholders' equity | 23,876,791 | 23,379,191 | ||||||
| Total liabilities and shareholders' equity | $ | 36,678,497 | $ | 36,576,196 | ||||
|
|
||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (Unaudited) | ||||||||
| Three months ended | ||||||||
|
|
||||||||
| 2013 | 2012 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 293,654 | $ | 39,140 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
|
Charges incurred in connection with the vesting and issuance of common stock for employee and director compensation |
84,392 | 125,333 | ||||||
| Loss on disposal of property and equipment | 14,935 | - | ||||||
| Non-cash interest and amortization of debt discount | 2,095 | - | ||||||
| Bad debt expense (recoveries), net | 26,431 | (6,129 | ) | |||||
| Depreciation | 1,218,071 | 834,006 | ||||||
| Amortization | 21,953 | 185,600 | ||||||
| Change in fair value of warrant liabilities | (219,097 | ) | (463,133 | ) | ||||
| Provision for deferred tax liability | 6,911 | 6,921 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 705,115 | 81,320 | ||||||
| Finance receivables | (38,671 | ) | 30,831 | |||||
| Inventory | 78,017 | 1,331,390 | ||||||
| Prepaid expenses and other current assets | (51,960 | ) | 79,629 | |||||
| Accounts payable | (1,247,786 | ) | (115,452 | ) | ||||
| Accrued expenses | 17,764 | (1,451,446 | ) | |||||
| Net cash provided by operating activities | 911,824 | 678,010 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (14,626 | ) | (1,525 | ) | ||||
| Purchase of property for rental program | (2,074,975 | ) | (2,075,390 | ) | ||||
| Net cash used in investing activities | (2,089,601 | ) | (2,076,915 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
|
Net proceeds from the exercise of common stock warrants and the retirement of common stock |
85,654 | - | ||||||
| Proceeds from line of credit | 1,000,000 | 1,337,779 | ||||||
| Repayment of long-term debt | (76,977 | ) | (161,816 | ) | ||||
| Net cash provided by financing activities | 1,008,677 | 1,175,963 | ||||||
| Net decrease in cash and cash equivalents | (169,100 | ) | (222,942 | ) | ||||
| Cash and cash equivalents at beginning of year | 5,981,000 | 6,426,645 | ||||||
| Cash and cash equivalents at end of period | $ | 5,811,900 | $ | 6,203,703 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | 69,735 | $ | 26,150 | ||||
| Depreciation expense allocated to cost of sales | $ | 1,081,515 | $ | 676,218 | ||||
| Reclass of rental program property to inventory | $ | 20,661 | $ | 5,559 | ||||
| Prepaid items financed with debt | $ | 101,850 | $ | 128,062 | ||||
| Equipment and software acquired under capital lease | $ | 22,036 | $ | - | ||||
| Disposal of property and equipment | $ | 174,204 | $ | - | ||||
Discussion of Non-GAAP Financial Measures
This press release includes the following measures defined as non-GAAP
financial measures by the
As used herein, non-GAAP net income (loss) represents GAAP net income (loss) excluding any adjustment for fair value of warrant liabilities and proxy contest. As used herein, non-GAAP diluted earnings (loss) per common share is calculated by dividing non-GAAP net income (loss) applicable to common shares by the diluted weighted average number of shares outstanding.
Management believes that non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per common share are important measures of USAT's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. We believe that these non-GAAP financial measures serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current and future financial performance.
As used herein, Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and change in fair value of warrant liabilities and stock-based compensation expense . We have excluded the non-operating item, change in fair value of warrant liabilities, because it represents a non-cash charge that is not related to USAT's operations. We have excluded the non-cash expenses and stock-based compensation as they do not reflect the cash-based operations of USAT. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity, and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for changes in fair value of warrant liabilities and stock-based compensation expense.
As used herein, operating margin represents operating income or loss divided by revenues and non-GAAP operating margin represents operating income or loss excluding any adjustments for proxy contest divided by revenues.
| Non-GAAP Reconciliation | ||||||||
| Reconciliation of Net Income (Loss) to Non-GAAP Net Income (Loss) and Net | ||||||||
| Earnings (Loss) Per Common Share - Diluted to Non-GAAP Net Earnings | ||||||||
| (Loss) Per Common Share - Diluted | ||||||||
| Three Months Ended | ||||||||
|
|
|
|||||||
| Net income | $ | 293,654 | $ | 39,140 | ||||
| Non-GAAP adjustments: | ||||||||
| Operating expenses | ||||||||
| Selling, general and administrative: | ||||||||
| Proxy related costs | - | 328,000 | ||||||
| Fair value of warrant adjustment | (219,097 | ) | (463,133 | ) | ||||
| Non-GAAP net income (loss) | $ | 74,557 | $ | (95,993 | ) | |||
| Net income | $ | 293,654 | $ | 39,140 | ||||
| Non-GAAP net income (loss) | $ | 74,557 | $ | (95,993 | ) | |||
| Cumulative preferred dividends | (332,226 | ) | (332,226 | ) | ||||
| Net loss applicable to common shares | $ | (38,572 | ) | $ | (293,086 | ) | ||
| Non-GAAP net loss applicable to common shares | $ | (257,669 | ) | $ | (428,219 | ) | ||
| Weighted average number of common shares outstanding (basic and diluted) | 33,324,295 | 32,518,230 | ||||||
| Net income (loss) per common share (basic and diluted) | $ | (0.00 | ) | $ | (0.01 | ) | ||
| Non-GAAP net loss per common share (basic and diluted) | $ | (0.01 | ) | $ | (0.01 | ) | ||
|
Non-GAAP Reconciliation |
||||||||
| Reconciliation of Operating Margin to Non-GAAP Operating Margin | ||||||||
| Three Months Ended | ||||||||
|
|
|
|||||||
| Operating income (loss) | $ | 128,918 | $ | (414,232 | ) | |||
| Non-GAAP adjustments: | ||||||||
| Operating expenses | ||||||||
|
Selling, general and administrative |
|
|||||||
| Proxy related costs | - | 328,000 | ||||||
| Operating income (loss), Non-GAAP | $ | 128,918 | $ | (86,232 | ) | |||
| Revenues | $ | 10,123,058 | $ | 8,390,277 | ||||
| Operating Margin | 1.3 | % | -4.9 | % | ||||
| Operating Margin, Non-GAAP | 1.3 | % | -1.0 | % | ||||
|
Reconciliation of GAAP Net Income to Adjusted Earnings Before |
||||||||
|
Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) |
||||||||
| Three months ended | ||||||||
|
|
|
|||||||
| Net income | $ | 293,654 | $ | 39,140 | ||||
| Less interest income | (13,526 | ) | (20,166 | ) | ||||
| Plus interest expenses | 60,976 | 23,006 | ||||||
| Plus income tax expense | 6,911 | 6,921 | ||||||
| Plus depreciation expense | 1,218,071 | 834,006 | ||||||
| Plus amortization expense | 21,953 | 185,600 | ||||||
| Less change in fair value of warrant liabilities | (219,097 | ) | (463,133 | ) | ||||
| Plus stock-based compensation | 84,392 | 125,333 | ||||||
| Adjusted EBITDA | $ | 1,453,334 | $ | 730,707 | ||||
F-USAT
VP Corp. Comm. &
Investor Relations
vrosa@usatech.com
Source:
News Provided by Acquire Media